Wednesday, June 29, 2005

US company accused of rorting Iraq contracts

By Sue Pleming
June 29, 2005

A top US Army procurement official has said Halliburton's deals in Iraq are the worst example of contract abuse she has seen, as Pentagon auditors examine more than $US1 billion ($A1.3 billion) potential overcharges by the Texas-based company.

Bunny Greenhouse, the Army Corps of Engineers' top contracting official turned whistleblower, told a congressional hearing by Democrats on Monday that every aspect of Halliburton's oil contract in Iraq had been controlled by the Office of the Secretary of Defence.

"I can unequivocally state that the abuse related to contracts awarded to KBR (Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career," Ms Greenhouse said.

Her blistering criticism came as the Democrats released a new report that identified more than $US1 billion in "questioned" costs and $US422 million in "unsupported" costs for Halliburton's work in Iraq.

Halliburton's subsidiary KBR is the US military's biggest contractor in Iraq and has been accused by Democrats of getting lucrative work there because of its ties to Vice-President Dick Cheney, who headed the company from 1995 to 2000. Asked if she thought the Defence Secretary's office was involved in handing out and running of contracts to KBR, Ms Greenhouse replied: "That is true."

Halliburton strongly rejected comments by Ms Greenhouse and others at the hearing, including a former KBR employee who said the company overcharged for food services to troops.

"The only thing that's been inflated is the political rhetoric, which is mostly a rehash of last year's elections," spokeswoman Cathy Mann said.

As to claims of political influence because of Mr Cheney, Ms Mann said it was easier to "assign devious motives than to take the time to learn the truth".

The Pentagon and the Army Corps of Engineers have denied any special treatment for KBR.

Democrats called for an urgent hearing and an investigation into what they said were contracting abuses involving KBR. "This testimony doesn't just call for congressional oversight - it screams for it," said Senator Byron Dorgan, a Democrat from North Dakota.

What concerned Ms Greenhouse most was that the oil contract, which had a top value of $US7 billion, was given to KBR without competitive bidding. She irked her bosses by handwriting her concerns in official documents for the oil deal but said these were overlooked.

Among the costs that Pentagon auditors questioned were $US152,000 in "movie library costs", a $US1.5 million tailoring bill that auditors deemed higher than reasonable, more than $US560,000 for heavy equipment that was considered unnecessary and two multimillion-dollar transportation bills that appeared to overlap.

- agencies